1. eCommerce
Basics Fuk
Oleh: Fung
Lestario
Global Entrepreneurship Program
Indonesia (GEPI)

2. Definit
ion
“Buyi &selli goo &servi electroni
ng
ng ds ces cally”
Global Entrepreneurship
2

3. Conte
nts
1
2
Indonesian
eCommerce Landscape
Compet Environ &Strate
itive
ment
gies
Global Entrepreneurship
3

4. Conte
nts
1
2
Indone eComm Landsc
sian
erce
ape
Competitive Environment & Strategies
Global Entrepreneurship
4

5. Fiv ke eleme o eComm
e y nts f erce
Demand
Technology
Connectivity
Payment
Logistics
Global Entrepreneurship
5

6. Fiv ke eleme o eComm
e y nts f erce
Demand
Technology
Connectivity
Payment
Global Entrepreneurship
6

7. Demand
Ve stro dema poten
ry ng nd tial
250 Million pop.
Median age: 28.5 years old
Rising middle class
Urban pop.: 51% of total
Global Entrepreneurship
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8. Demand
Ve stro demand
ry ng potential
250 Million pop.
Median age: 28.5 years old
Rising middle class
Urban pop.: 51% of total
Global Entrepreneurship
8

9. Demand
Ve stro demand
ry ng potential 28.5 years old
Median age:
Source: CIA World
Factbook
Global Entrepreneurship
9

10. Demand
Ve stro demand
ry ng potential 28.5 years old
Median age:
Source: redwingasia.com
Global Entrepreneurship
1

11. Demand
Ve stro demand
ry ng potential
250 Million pop.
Median age: 28.5 years old
Rising middle class
Urban pop.: 51% of total
Global Entrepreneurship
1

12. Demand
Ve stro demand
ry ng potential Class
Rising Middle
Source:
BCG
Global Entrepreneurship
1

13. Demand
Ve stro demand
ry ng potential
250 Million pop.
Median age: 28.5 years old
Rising middle class
Urban pop.: 51% of total
Global Entrepreneurship
1

14. Fiv ke eleme o eComm
e y nts f erce
Demand
Technology
Connectivity
Payment
Global Entrepreneurship
1

15. Connectivity
Lo ba of internet users grow
w se butInternet users (as % of th
good
population)
9
0
80
7 7
4 5
70
7
74 8
7
71 8 69
69
56
56
7 7
8 9
71
8 7
1 9 7466
71
61
56
60
50
4
0
34
29
23
30
8
20
10
0
Source:
ITU
20
08
20
United 09 Jap
States
an
20
10
Singap
ore
Malay
sia
Global Entrepreneurship
15
12
11
7
42
38
20
11
Chi
na
Indon
esia
20
12
1

16. Connectivity
1,
6 1,3
1,
4 4
1,
2
1,
0
0,
Sol growth in mobile-phone
id subscribers
Mobile phone subscribers (avg. phone
ownership per 1,4
person)
1,3
9
0,87 0,86
8
0,
6
0,
0,6
0
0
20
08
Source:
ITU
1,19
1,08
1,01
4
0,
2
0,
5
0,48
0,92 0,89
0,6
9
0,56
20
Singap09 Malay
ore
sia
1,5
0 1,27
0
8
,
0,97
8
201
0
Indonesia
1,0
2
0,9
2
1,05
0,95
0,64
Global Entrepreneurship
1,1 1,0
5 9 0,98
0,81
0,73
2011
Jap
an
1,5
1,41
3
United States
20
12
China
1

17. Connectivity
Very good growth potential
hence
fo eComm
for smartphones,
conducive r erce
Source: redwingasia.com
Global Entrepreneurship
1

18. Fiv ke eleme o eComm
e y nts f erce
Demand
Technology
Connectivity
Logistics
Payment
Global Entrepreneurship
1

19. Logistics
Count
ry
Indonesia overall logistics
behind most lags
performance
countries in ASEAN
LPI
LPI Custo Infrastru
International
Logistics
Rank Score ms
Singapor
e Hong
1
Kong,
China
3
Finland
2
4
8
cture
shipments
competence
4.1
4.15
3.99
4.07
4.07
4.39
3.97
4.12
4.18
4.08
4.09
4.28
3.98
4.12
3.85
4.14
4.14
4.1
3.87
4.26
3.67
4.09
4.05
4.32
3.72
4.11
3.61
3.97
4.03
4.21
3.67
4.14
3.56
3.96
4.11
4.21
3.25
3.61
3.46
3.47
3.52
3.8
3.9
3
3.28
3.43
3.4
3.45
3.54
3.86
2.96
3.08
3.21
2.98
3.18
3.63
3.9
3
2.94
3.5
2.77
2.87
2.98
3.14
3.09
3.58
2.62
2.53
2.65
2.8
2.54
2.68
2.97
2.97
3.14
3.14
2.85
2.68
3.3
3.12
3.16
4.1
3
4.1
2
4.0
5
Germ
any
26
Japan United
29
States China
38
Malaysia
46
Thailand
Indonesia
India
3.61
Sri
Philippines
52
59
53
8
1
2.7
3.4
59
2.5
8
Cambodia
10
1
2.56
3.1
8
2.37
2.3
2.2
2.2
4
2.1
Lanka
Vietnam
Myanmar
Source:
World Bank
9
12
9
Tracking & Timeli
tracing
ness
4.0
3
2
3.0
8
3.0
2.
5
Global Entrepreneurship
3
2.61
2.47
2.
8
2.77
2.4
2
3.64
2.6
5
2.5
3.3
2.
9
2.34
2.9
5
2.5
9
1

20. Fiv ke eleme o eComm
e y nts f erce
Demand
Technology
Connectivity
Payment
Logistics
Global Entrepreneurship
2

21. Payment
Ve lo cre card
ry w dit penetration
Number of active
credit cards
…
Source:
AKKI
Global Entrepreneurship
2

22. Payment
… However,
availa
Innovative online
ble
Banks


Prepaid mobile
 payment
Payment-
gateways:
payment
solutions
Indom Veritr Dok Finp et
og, ans, u, ay, c
Global Entrepreneurship
2

23. Fiv ke eleme o eComm
e y nts f erce
Demand
Technology
Connectivity
Payment
Global Entrepreneurship
2

24. Technology
Each evolution stage lowers
individ t ha gre eComm sit
the barrier for
uals o ve at erce
e
Initial Capital
Invest
Complexity to
ment
Us
Resource
er
Require
Development
ment
Cont
rol
Adaptability
High
Medium low
Low
High
Medium
Low
High
Low
Low
High
Low
Low - medium
Low
Medium
High
Global Entrepreneurship
2

25. Conclus
ions
Indonesia’s demographic conditions present
great opportunity for
eCommerce. Rapid growth is imminent as
Appropriate and balanced governance, ar als
infrastructure development
requi & regulations growforwa
t ensu sustain
rules
e
progresses: communication, logistics, ando
red o resolutions. th rd.
able
payment
Global Entrepreneurship
2

26. Conte
nts
1
Indonesian eCommerce Landscape
2
Compet Environ &Strate
itive
ment
gies
Global Entrepreneurship
2

27. eComm Typ
erce
es
C2C / Marketplace
B2C
B2B
Daily Deals
Global Entrepreneurship
2

28. Typ &implications scenar
es (typical
ios)
C2C
B2C
B2B
Basic success
Indicators
Traffic, transaction &
sales volume
Sales & profit margin
Member size,
revenue
Capital
Requirement
Low
High
Low
Monetization
Cut from transaction
amount, ads,
premium services
Sales margin, ads,
volume discounts,
other seller
incentives
Global Entrepreneurship
Premium business
subscription
services,
ads
2

29. On hand play a stab sta
ly ful ers t le te
Source:
chinasocialgames.co
Global Entrepreneurship
2

30. I B2 sca matt
n C, le ers!
Source:
Investopedia.co
Global Entrepreneurship
3

31. In C2C, the network
rol

effect plays a ago o servi ha o th val
big
e
the effect that
produser of peo
t oth
one
uct o er ple
od r ce
o th
s n e ue f at
Better be early than late!
Global Entrepreneurship
3

32. Trust still the key barrier i
to eCommerce
n
Some of the tactics to build
Indonesia

Cash-on-delivery
trust to consumers

 Buyer & seller ratings
 (C2C) Publicity on credible
Strate partner wit credi
media
gic
ship
h ble
bran
ds
Global Entrepreneurship
3

33. Typi Busin Flo o B2 eComm
cal ess w f C erce
Sourc
ing
Customer Service
Cont
ent
Marke
ting
Fulfillm
ent
IT, Finance, HR, BI
Global Entrepreneurship
3

34. Sourc
ing
Sourc meth &implicat (typic
ing ods
ions
al)
Purchase on
Margins
Ord
er
Consignment
Outright
Purchas
e
Dropship
Cash Flow
Operational
reliability
Global Entrepreneurship
3

35. Sourc
ing
Gro marg (typic
ss ins al)
Range
Average
Mobile Phone
3-5%
4%
Computers
3-12%
8%
10-30%
20%
5-40%
25%
Books
15-30%
25%
Home Decor
25-100%
35%
Fashion
20-70%
40%
Home (electrical)
applian
Toys,ces baby
kids,
Note: data obtained from qualitative surveys on online & offline retailers; Actual
negotia
Global Entrepreneurship
margins depend much on volume, cooperation &
3

36. Sourcing
The importance of Terms of
Payment
Cas conver cycle da
h sion
10
ys
Global Entrepreneurship
(Walma
rt’s):
3

37. Sourcing
The importance of Terms of Payment
(Amazon’s): financ Amaz busin
suppli ar
ers
e ing
on’s
ess!
Global Entrepreneurship
th
e
3

38. Content
Strategic placement for
premium
Popular / high margins / loss leaders
(highly discounted)
Source:
lazada.co.id
landi pa
ng ge
Global Entrepreneurship
3

39. Content
Pictures,
nonprodu
descriptions,
standardize cts
reviews
d
Source:
zalora.co.id
–cruci es fo
al, p. r
Global Entrepreneurship
3

40. Marketing
Focus on digital marketing!
Digital marketing provides highest
return for eCommerce

Search Engine Optimization

Search Engine Marketing (AdWords, GDN, FB,

etc) Guerilla campaigns (Twitter, other freebies,

etc) BB Broadcasts

The only exception: credibi an onli yo ha
obtai tracti &th bud lity, d y f u ve
TV (to build
ned on
e get
Global Entrepreneurship
4

41. Fulfillm
ent
Invest in system, carefully choose
logistics partners

Overall: Investments in systems (technology,
procedures, rules) are
essential.
Considera Ideally the fulfillment system is fully

In-bound: Only a very small fraction of
integrated with others:
tions:
order management, integrated
 suppliers have open customer service, finance
 to ensure reliability.
inventory system
Warehousing: Clear floor planning, SOP, system are mandatory vari
(timeliness, tracing & tracking,
Out-bound: Partner selection is crucial (if outsourced). Quality
responsiveness) and commitment
es
widely among the players.
Global Entrepreneurship
4

42. Topic List for

Interactive Discussions
Social Media:
chann










prioritize & use top
els
Newsletter
Blogs & community
Loss leaders & long-tail items
Bundles & seasonal packages
Merchant-sponsored
promotions
Relaxed policy
Installments
return
rate
Free shipping
COD
Private labels
Global Entrepreneurship
4

43. Fung Fuk
Lestario
Executive Director,
GEPI
fung.lestario@gepindon
4